2011 (3) TMI 1431 - HC - Income Tax

Voluntary Disclosure of Income - petitioner has been informed that since he has not paid the tax as required under section 67(1) of the Finance Act, 1997 (the Act) in respect of the Voluntary Disclosure of Income within the stipulated time, his declaration furnished under section 65(1) of the Act, is treated as being never to have been filed under the Scheme and refusing to issue the certificate under section 68(2) of the Act Held that - assessees are not entitled to the benefit of the Scheme since the payments made by them were not in terms of the Scheme, Revenue authorities to refund or adjust the amounts already deposited by the assessees in purported compliance with the provisions of the Scheme to the concerned assessees in accordance with law, petitioner is not entitled to the benefit of the Scheme since the payment was not made in terms of the Scheme, the respondent authority is directed to either refund or adjust the amount of Rs.4,74,584/- already deposited by the assessee in purported compliance of the provisions of the Scheme, in accordance with law

Summary

Issues:
Challenge to communication rejecting declaration under Finance Act, 1997 due to delayed tax payment under Voluntary Disclosure of Income Scheme.

Analysis:
The petitioner challenged a communication dated 5.10.1998 rejecting his declaration under the Finance Act, 1997, due to delayed tax payment under the Voluntary Disclosure of Income Scheme. The petitioner disclosed income of Rs.4,74,584/- for certain assessment years and made a delayed tax payment on 27.3.1998, believing the deadline was 31.3.1998. The communication stated that the tax should have been paid within three months of filing the declaration, leading to rejection. The petitioner's subsequent representations to the Central Board of Direct Taxes were unfruitful, prompting the petition to the High Court.

The controversy revolved around the interpretation of sections 66 and 67 of the Finance Act, 1997, regarding tax payment under the Scheme. The Supreme Court's decision in Hemalatha Gargya's case established that tax payment under the Scheme is mandatory within the specified time, subject to conditions like interest payment and proof submission. Non-compliance with these conditions within three months results in the declaration being deemed never made under the Scheme. The Court emphasized strict compliance with statutory provisions for claiming benefits under the Scheme, precluding equitable considerations when conditions are explicitly stated.

The High Court, following the Supreme Court's precedent, held that the petitioner was not entitled to the Scheme's benefits due to non-compliance with payment terms. However, in line with the Supreme Court's directive, the respondent authority was directed to refund or adjust the amount deposited by the petitioner in accordance with the law. The Court's decision aligned with the principle that statutory requirements must be strictly adhered to when seeking benefits under such schemes, emphasizing the mandatory nature of tax payment timelines and conditions.

In conclusion, while the petitioner's challenge to the rejection of the declaration under the Finance Act, 1997, was partially successful, the Court directed the refund or adjustment of the deposited amount in line with the Supreme Court's directive. The judgment underscored the importance of strict compliance with statutory provisions in availing benefits under the Scheme, highlighting the mandatory nature of tax payment timelines and conditions for declarants.